Library - Law Offices of Robert Wayne Pearce

Summit Brokerage Services Fined for Variable Annuity Supervisory Failures

Summit Brokerage Services, Inc., headquartered in Boca Raton, Florida, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities. Registered with FINRA since 1994, Summit Brokerage Services currently has 864 registered representatives and 428 branch offices. FINRA found that from January 2013 to December 2014, Summit Brokerage Services failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities. Additionally, FINRA found that Summit Brokerage Services failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that Summit Brokerage Services allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.

Nov 16, 2016

First Allied Securities Fined for Variable Annuity Supervisory Failures

First Allied Securities, Inc., headquartered in San Diego, California, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities. Registered with FINRA since 1994, First Allied Securities currently has 1,119 registered representatives and 491 branch offices. FINRA found that from January 2013 to December 2014, First Allied Securities failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities. Additionally, FINRA found that First Allied Securities failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that First Allied Securities allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.

Nov 14, 2016

Cetera Financial Specialists Fined for Variable Annuity Supervisory Failures

Cetera Financial Specialists, LLC, headquartered in Schaumburg, Illinois, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities. Registered with FINRA since 1982, Cetera Financial Specialists currently has 1,580 registered representatives and 1,009 branch offices. FINRA found that from January 2013 to December 2014, Cetera Financial Specialists failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities. Additionally, FINRA found that Cetera Financial Specialists failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that Cetera Financial Specialists allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.

Nov 9, 2016

Cetera Advisor Networks Fined for Variable Annuity Supervisory Failures

Cetera Advisor Networks, LLC, headquartered in El Segundo, CA, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities. Registered with FINRA since 1983, Cetera Advisor Networks currently has 3,048 registered representatives and 1,209 branch offices. FINRA found that from January 2013 to December 2014, Cetera Advisor Networks failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities. Additionally, FINRA found that Cetera Advisor Networks failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that Cetera Advisor Networks allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.

Nov 7, 2016

Voya Financial to Pay $2.75 Million for Variable Annuity Supervisory Failures

Voya Financial Advisors, Inc. of Des Moines, Iowa submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuity L-shares. Voya Financial Advisors (Voya Financial) was subject to a similar FINRA disciplinary action in 2015 which alleged the firm failed to supervise the sales of Unit Investment Trusts (UITs). Registered with FINRA since 1968, Voya Financial, f/k/a ING Financial Partners, Inc., currently has 2,779 registered representatives and 1,485 branch offices. FINRA found that from July 2012 to August 2014, Voya failed to establish, maintain, and enforce a supervisory system to identify red flags in the sale of variable annuity L-shares. Further, FINRA found that Voya failed to provide its registered representatives with adequate training and guidance on suitability considerations for these multi-share class variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that Voya allegedly failed to provide its advisors with reasonable guidance to discern this class of investor.

Nov 2, 2016

Woodbury Financial Broker Permanently Barred by FINRA for Elder Financial Abuse

Joseph R. Butler, a former Registered Representative with Woodbury Financial Services, Inc. (Woodbury Financial) was permanently barred by the Financial Industry Regulatory Authority (FINRA) for taking advantage of an elderly, dementia suffering customer’s bank accounts, converting her money for his own use, and naming himself as her annuity’s beneficiary, falsely representing that he was her son. In its investigation, FINRA states that Mr. Butler admitted that his 75 year old, widowed customer who suffered from dementia was dependent on him and trusted him to take care of her. Mr. Butler was added to the elderly customer’s accounts after observing that her mental faculties were declining. It was then that Mr. Butler began withdrawing money from her accounts. According to FINRA’s findings, between September 2009 and December 2010, Mr. Butler wrote nine checks from his customer’s accounts totaling $105,646.158. Eight of the nine checks were made payable to himself or cash, and the ninth check he used to pay his Federal income taxes. FINRA goes on to state that Mr. Butler arranged to have the customer’s account statements delivered to his home address rather than hers and, in the same month, wired $5,000 from her accounts to his own, claiming that it was a “test,” according to FINRA. Further, Mr. Butler sent a change request form for his customer’s $453,000 annuity in which he removed the granddaughters as beneficiaries and named himself, falsely representing on the form that his relationship to the customer was “son.”

Oct 31, 2016

Legend Securities Broker Named in FINRA Complaint for Allegations of Fraudulent and Excessive Trading

Hank M. Werner, a Northport, New York-based registered representative formerly employed with Legend Securities, Inc. and Liberty Partners Financial Services, LLC, was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he fraudulently and excessively traded the accounts of his customer, a 77 year old blind and physically disabled widow. According to the FINRA complaint, while working at Liberty Partners Financial Services and then later at Legend Securities, Mr. Werner serviced and exercised control over all of his customer’s accounts. Due to his customer’s disabilities, she relied completely upon Mr. Werner for investment recommendations and information on account activity. However, FINRA’s complaint alleges that Mr. Werner churned and excessively traded the elderly widow’s accounts, allegedly placing over 700 trades and generating approximately $243,430.20 in commissions and fees and approximately $183,734.33 in net losses for his customer. Further, the complaint alleges that when Mr. Werner changed firms, he increased his markups and commissions on her trades to 3.75-4.25%, an increase of over 40%!

Oct 28, 2016

Merrill Lynch Broker Named in FINRA Complaint Amid Allegations of Misrepresented Investment Recommendations

Landon L. Williams, a former Daytona Beach, Florida-based registered representative with Merrill Lynch, Pierce, Fenner & Smith, was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he made false and/or misleading statements to customers regarding the securities transactions he was recommending. According to the FINRA complaint, Mr. Williams participated in phone conversations with five different customers and allegedly made misleading and/or false statements and/or failed to disclose material information about securities recommendations. While employed as a Financial Solutions Advisor in the firm’s Merrill Edge Advisory Center (Merrill Edge), Mr. Williams, working in a Merrill Edge call center, allegedly recommended that a customer sell her positions in the Blackrock Core Bond Fund Class C and invest in the Blackrock Funds Diversified Portfolios IV (Growth) Class A. Mr. Williams allegedly told his client that by switching to the “A” share, she would realize a 2% increase in her annual rate of return. This statement was alleged by FINRA to be false and misleading.

Oct 24, 2016

FINRA Files Complaint Against Bay Mutual Financial Broker For Alleged Unsuitable Recommendations

Christopher Ariola, of Santa Monica, California, was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he made unsuitable recommendations to elderly retirees to invest in gold and energy stocks. As a result of his unsuitable recommendations, FINRA alleges that his customers suffered combined losses totaling approximately $140,000. Formerly registered with Bay Mutual Financial, LLC, a Santa Monica, California based broker dealer, the now unlicensed Christopher B. Ariola is alleged to have recommended to three elderly retirees to invest a substantial portion of their limited retirement assets in gold and energy stocks. Mr. Ariola’s alleged recommendations were unsuitable in light of the customers’ financial circumstances, investment objectives, and low to moderate risk tolerances.

Oct 21, 2016

MetLife and Pruco Securities Broker Barred by FINRA for Misrepresentations in Connection with Variable Annuities

Winston Turner, a former broker at Pruco Securities LLC, and MetLife Securities, Inc., was permanently barred from acting as a broker or associating with firms that sell securities to the public by the Financial Industry Regulatory Authority (FINRA) due to findings that he made fraudulent misrepresentations and omissions in connection with variable annuity investments. FINRA found that Winston Turner, of Tampa, Florida, induced three customers to purchase securities by intentionally making misstatements regarding the earnings to be generated by their variable annuities. According to FINRA, Mr. Turner falsely told three customers that their variable annuity investments would earn a “guaranteed” minimum annual interest and misrepresented to a customer the tax implications of her variable annuity purchase. FINRA also found that Mr. Turner attempted to circumvent his member firm’s supervisory system by misrepresenting the source of funds in connections with variable annuity applications. Further, Mr. Turner misrepresented to his firm his personal email address as the email address of his customers in order to ensure that the customers were not contacted.

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